Howard County elected officials this week denounced Gov.Martin O'Malley's proposal to shift more of the responsibility for teachers' retirement costs to local jurisdictions.
"This is really a crippling blow to our local budget," said County Executive Ken Ulman, a Democrat, noting that the proposal would cost Howard County $16 million. "We're sending a message to the County Council and all our department heads that this throws all our budget planning up in the air."
He called the proposal "the worst deal that could have been proposed."
O'Malley's fiscal year 2013 budget proposal, which must be approved by the General Assembly, aims to reduce the state's projected $1.1 billion deficit by $656 million. One of the largest and "most controversial" reductions O'Malley is proposing is shifting $239 million in teachers' retirement costs to the counties.
"Our proposal would require local jurisdictions to pay 50 percent of the combined cost of (teachers') social security, which the counties are already (fully) covering, and other teachers' retirement costs, which the state is currently paying," he said. Currently, counties pay one-third of the total retirement costs.
O'Malley explained the rationalization for shifting teachers' retirement costs at a budget presentation for reporters Wednesday, Jan. 18.
"I have become convinced that some better sharing of that responsibility is in order, primarily because the counties are much more closer to the negotiation table than the state is," he said.
But Ulman rejected that argument.
"It's just not true; we're not at the negotiation table," he said. Ulman explained that the Board of Education negotiates contracts with the teachers' union and "they send me a bill."
Howard County Education Association President Paul Lemle said O'Malley's proposal, if approved, probably would result in teachers' contracts that do not include cost-of-living or salary adjustments, as well as other unintended consequences.
"You don't recruit and retain good educators by cutting their pay and benefits," he said.
So far, O'Malley's proposal is proving to be a tough pill to swallow for state lawmakers, too.
"I'm going to have to be really convinced," said Del. Guy Guzzone, a Columbia Democrat who sits on the House Appropriations Committee, which is responsible for vetting O'Malley's budget plan before sending it to the House floor.
Del. Gail Bates, a West Friendship Republican who also sits on the Appropriations Committee, recalled that when teachers' social security costs where shifted to local jurisdictions years ago it was "devastating for the counties."
She said O'Malley's proposal could have the same effect.
What will likely be one of the deciding factors for some legislators is whether the counties can count the pension costs toward "maintenance of effort," the state-mandated requirement that school systems must budget as much per-pupil funding as they did the previous year.
"Unless you make it part of maintenance of effort, you're going to start cutting other services and you're going to force the locals to raise taxes," Bates said.
O'Malley said maintenance of effort is "one of the big variables that we still have to work out." He noted concerns about counties taking money out of the school system budgets because then "we're not protecting the priority of education."
Ulman, however, doesn't see it that way. More than half of the county budget goes toward meeting the maintenance of effort requirement and if the teacher pension costs cannot be included in that, he said, "it gives me very little leeway."
One of the problems is education spending varies widely across the state. Howard County, Ulman said, has consistently been number one in "local effort" — the portion of funding the county is contributing to the school system compared to the portion of funding coming from the state.
Ulman said Howard County asks its residents to pay the maximum piggy-back rate on income tax to help pay for quality of life services like education.
"Other counties have clearly not asked their citizens to chip in," he said.
"Some counties provide minimal funding for whatever reason," Guzzone agreed."It's not fair for those differences not to be taken into account."
Asked if raising taxes or fees is something the county is looking at as a way absorb the cost, Ulman said: "We have very few options, but I think we have to keep everything on the table through this discussion."